A former company director will go to the high court today to demand the disclosure of MI5, MI6 and Ministry of Defence papers in an unprecedented attempt to sue customs for malicious prosecution and abuse of power.

Ali Daghir is claiming £1m compensation for his prosecution by customs in 1991. He was convicted for conspiring to export electrical equipment - misleadingly described as "nuclear triggers" - to Saddam Hussein.

Mr Daghir, of dual British-Iraqi nationality and former director of Euromac, was arrested after a 19-month operation conducted by US customs with the personal backing of Britain's then prime minister, Lady Thatcher.

His conviction was quashed by the court of appeal in 1994 on the grounds that the trial judge misdirected the jury. The judge said they could convict if the equipment was capable of military use. The prosecution's case was that the equipment had been specifically designed for nuclear weapons.

Documents obtained by the Scott arms-to-Iraq inquiry show customs desperate for a conviction after the collapse of the so-called "supergun" affair, dropped by the prosecution in light of evidence that the government ignored warnings that British companies were supplying parts to Iraq.

The Guardian has learned that government lawyers have admitted MI5 and MI6 hold documents on Mr Daghir. They have warned that disclosure of the documents will depend on consultations with ministers.

Jack Straw last year signed a five-page public interest immunity certificate designed to prevent the release of MI5 documents held on individuals.

The admission that MI5 and MI6 hold files on Mr Daghir came after his lawyers threatened to serve a witness summons on Stephen Lander, the head of MI5.

On the basis of intelligence and expert advice from the MoD, the Foreign Office has admitted the electrical equipment in the Daghir case -known as capacitors - could have many uses and that it is impossible to determine its intended use in Iraq.

The FO advised customs before Mr Daghir's trial in 1991 not to claim the equipment was specifically designed for nuclear use. That advice was ignored and was not disclosed to Mr Daghir at the time.

In a further twist, a customs expert, whose evidence at the Daghir trial was heard behind closed doors, has so far refused to give customs a witness statement for its defence in the forthcoming civil trial.

Lawrence Kormornick, Mr Daghir's solicitor, said yesterday: "The court will be most concerned to avoid a repetition of the debacle which occured in the Matrix Churchill case".

That case, against three company directors, collapsed in 1992 when it was proved the government turned a blind eye to the sale of arms-related equipment to Iraq.

Mr Daghir, 60, said yesterday: "Having been wrongfully convicted, I spent 15 months in prison and have waited over 10 years for justice to be done".

The civil trial, for which Mr Daghir has been granted legal aid, is due to start in July.

Several similar convictions relating to the export, or attempted export, of goods to Iraq have already been quashed on appeal.

Seven directors have received compensation from the Home Office. One of them, Reginald Dunk, was awarded over £1m.